J. S. Bosworth, Referee
In Austin agt. Daniels (4 Denio [299], 301) the court, by Beabdsly, J., said : “ Bank officers are but agents of the corporation, and if they transcend or abuse their powers are as much responsible to their principal as are the agents of an individual. 'This ought to be regarded as too plain to require argument or authority, and I shall offer neither.” Perry, in his treatise on the law of trusts and trustees, enunciates as rules well settled, that the directors of corporations are trustees and agents of the shareholders and of the corporation (sec. 207); that a trustee cannot sleep on his trust; that the law knows no such person as ayassive trustee; that if a loss occurs from any want of attention, care or diligence of the trustee, after he accepts the office of trustee, he may be held responsible for not taking such action as was called for (sec. 266); that if a person assumes to act as trustee and becomes possessed of the trust fund and misapplies it, he cannot protect himself by showing that he was not legally a trustee (sec. 846); and that executors and administrators will be answerable for a breach of trust of their testator, though they may have distributed the assets without notice of the claim, unless the distribution was made by order of the court, or the time limited for suits against them has expired (sec. 846). Robinson et al. agt. Smith et al. (3 Paige [222], 231), Cunningham agt. Pell (5 Paige [607], 612), Butts agt. Wood 37 N. Y, 317), Osgood agt. Laytin (4 Abb. Ct. Ap. Cases, 418), Osgood agt. Ogden (id., 431) affirm these principles, illustrate to some extent their application, and the rights of action in favor of a receiver, which he can enforce.
The act' incorporating the Yorkville Savings Bank (Laws [71]*71of 1869, p. 788) names the defendant as one of the corporators (sec. 1) and as one of the first trustees of that corporation (sec. 4), and he continued to act as such trustee until the appointment of the plaintiff as receiver therein.
The dividends alleged in the complaint to have been declared and paid, were declared by the co-operation, concurrence and approval of the defendant.
There were no surplus profits at the time these dividends were declared, out of which they or any part thereof could be paid, and this fact was well known to the defendant. His misconduct by willfully co-operating with other trustees to effect, and in effecting, a declaration, and payment of dividends, when there were no surplus profits out of which they could be paid, is clearly and fully established. I think, therefore, that independent of any statutory enactments he is liable to the corporation for this misconduct, and that the receiver can enforce that liability.
I think the defendant is also clearly liable by force of statutory provisions, whether this corporation is or is not a moneyed corporation within the meaning of that term as defined by the Revised Statutes. Section 14 of the act incorporating this corporation (Laws of 1869) declares that “ the corporation hereby created shall be subject to the provisions of the eighteenth chapter of the first part of the Revised Statutes, and all other general laws affecting savings institutions so far as the same are applicable.” Section 2 of title 4 of that chapter (1 R. S., 601) declares that “it shall not be lawful for the directors or managers of any incorporated company in this state to make- dividends, excepting from the surplus profits accruing from the business of such corpora•tion, * * * and in case of any violation of the provisions of this section, the directors, under whose Administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large on the minutes of the said directors at the time, or were not present when the same did happen, shall, in their individual and [72]*72private capacities, jointly and severally, be liable to the said corporation, and to the creditors thereof in the event of its dissolution, to the full amount of the capital stock of the said company so divided, withdrawn, paid out or reduced, * * * with legal interest on the said respective sums from the time such liability accrued, and no statute of limitations shall be a bar to any suit at law or in equity, against such directors for any sums for which they are' made liable by this section.”
This language is so clear and precise that there can be no doubt that it includes a corporation like the Torkville Savings Bank.
Such continued to be the law up to the time that chapter 371 of the Laws of 1875, passed May 17, 1875 took effect, and still continues to be the law applicable to the directors or managers of savings institutions unless, as to them, it is repealed by the act of 1875. Section 56 of this act (id., 416) repeals several enumerated statutes relating specially to savings banks. No part of the Be vised Statutes is in terms repealed. If repealed, it must be because some provisions of the act of 1875 relating to its trustees or managers are in direct conflict with the part of the Bevised Statutes above quoted. I do not discover any thing in the act of 1875 which is necessarily of this character. If it be claimed that section 52 (id., 416) is of this character it may be answered, as I think, that that section only relates to the powers, privileges, duties and restrictions imposed upon the corporation itself, and conforms the powers, rights and privileges of the corporation, and subjects the corporation to the duties, restrictions and liabilities imposed by that act. It does not in terms, and in my opinion it does not by necessary implication, repeal so much of the act of 1869, as imposes upon the trustees the liability above stated, for making dividends when there are no surplus profits with which to pay them. Hence it is clear that if this corporation is a moneyed corporation the trustees are liable for all dividends declared prior to the passage of the act of 1875 under [73]*73section 10 of 1 Revised Statutes, 591, and if not a moneyed corporation then for all such dividends under section 2 of 1 Revised Statutes, 601 ( Vide sec. 11, id., p. 605).
And even if the ground and measure of the liability of a trustee of a savings bank for acts done after the act of 1875 is to be brought only in that act; then it will be found that section 33 of that act (p. 411) makes the duty of the trustees of such corporation to regulate the rate of interest, not exceeding six per cent per annum, upon the deposits therewith, in such manner that depositors shall receive, as nearly as may be, all the profits of such corporation after deducting necessary expenses.
Section 33 declares that “ no dividends or interest shall be declared, credited or paid except by authority of a vote of the board of trustees duly entered upon their minutes, wherein shall be recorded the ayes and noes upon such vote, and whenever any interest or dividends shall be declared and credited in excess of the interest or profits earned and appearing to the credit of such corporation, the trustees voting for such dividend shall be jointly and severally liable to the corporation for the amount of such excess so declared or credited.”
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J. S. Bosworth, Referee
In Austin agt. Daniels (4 Denio [299], 301) the court, by Beabdsly, J., said : “ Bank officers are but agents of the corporation, and if they transcend or abuse their powers are as much responsible to their principal as are the agents of an individual. 'This ought to be regarded as too plain to require argument or authority, and I shall offer neither.” Perry, in his treatise on the law of trusts and trustees, enunciates as rules well settled, that the directors of corporations are trustees and agents of the shareholders and of the corporation (sec. 207); that a trustee cannot sleep on his trust; that the law knows no such person as ayassive trustee; that if a loss occurs from any want of attention, care or diligence of the trustee, after he accepts the office of trustee, he may be held responsible for not taking such action as was called for (sec. 266); that if a person assumes to act as trustee and becomes possessed of the trust fund and misapplies it, he cannot protect himself by showing that he was not legally a trustee (sec. 846); and that executors and administrators will be answerable for a breach of trust of their testator, though they may have distributed the assets without notice of the claim, unless the distribution was made by order of the court, or the time limited for suits against them has expired (sec. 846). Robinson et al. agt. Smith et al. (3 Paige [222], 231), Cunningham agt. Pell (5 Paige [607], 612), Butts agt. Wood 37 N. Y, 317), Osgood agt. Laytin (4 Abb. Ct. Ap. Cases, 418), Osgood agt. Ogden (id., 431) affirm these principles, illustrate to some extent their application, and the rights of action in favor of a receiver, which he can enforce.
The act' incorporating the Yorkville Savings Bank (Laws [71]*71of 1869, p. 788) names the defendant as one of the corporators (sec. 1) and as one of the first trustees of that corporation (sec. 4), and he continued to act as such trustee until the appointment of the plaintiff as receiver therein.
The dividends alleged in the complaint to have been declared and paid, were declared by the co-operation, concurrence and approval of the defendant.
There were no surplus profits at the time these dividends were declared, out of which they or any part thereof could be paid, and this fact was well known to the defendant. His misconduct by willfully co-operating with other trustees to effect, and in effecting, a declaration, and payment of dividends, when there were no surplus profits out of which they could be paid, is clearly and fully established. I think, therefore, that independent of any statutory enactments he is liable to the corporation for this misconduct, and that the receiver can enforce that liability.
I think the defendant is also clearly liable by force of statutory provisions, whether this corporation is or is not a moneyed corporation within the meaning of that term as defined by the Revised Statutes. Section 14 of the act incorporating this corporation (Laws of 1869) declares that “ the corporation hereby created shall be subject to the provisions of the eighteenth chapter of the first part of the Revised Statutes, and all other general laws affecting savings institutions so far as the same are applicable.” Section 2 of title 4 of that chapter (1 R. S., 601) declares that “it shall not be lawful for the directors or managers of any incorporated company in this state to make- dividends, excepting from the surplus profits accruing from the business of such corpora•tion, * * * and in case of any violation of the provisions of this section, the directors, under whose Administration the same may have happened, except those who may have caused their dissent therefrom to be entered at large on the minutes of the said directors at the time, or were not present when the same did happen, shall, in their individual and [72]*72private capacities, jointly and severally, be liable to the said corporation, and to the creditors thereof in the event of its dissolution, to the full amount of the capital stock of the said company so divided, withdrawn, paid out or reduced, * * * with legal interest on the said respective sums from the time such liability accrued, and no statute of limitations shall be a bar to any suit at law or in equity, against such directors for any sums for which they are' made liable by this section.”
This language is so clear and precise that there can be no doubt that it includes a corporation like the Torkville Savings Bank.
Such continued to be the law up to the time that chapter 371 of the Laws of 1875, passed May 17, 1875 took effect, and still continues to be the law applicable to the directors or managers of savings institutions unless, as to them, it is repealed by the act of 1875. Section 56 of this act (id., 416) repeals several enumerated statutes relating specially to savings banks. No part of the Be vised Statutes is in terms repealed. If repealed, it must be because some provisions of the act of 1875 relating to its trustees or managers are in direct conflict with the part of the Bevised Statutes above quoted. I do not discover any thing in the act of 1875 which is necessarily of this character. If it be claimed that section 52 (id., 416) is of this character it may be answered, as I think, that that section only relates to the powers, privileges, duties and restrictions imposed upon the corporation itself, and conforms the powers, rights and privileges of the corporation, and subjects the corporation to the duties, restrictions and liabilities imposed by that act. It does not in terms, and in my opinion it does not by necessary implication, repeal so much of the act of 1869, as imposes upon the trustees the liability above stated, for making dividends when there are no surplus profits with which to pay them. Hence it is clear that if this corporation is a moneyed corporation the trustees are liable for all dividends declared prior to the passage of the act of 1875 under [73]*73section 10 of 1 Revised Statutes, 591, and if not a moneyed corporation then for all such dividends under section 2 of 1 Revised Statutes, 601 ( Vide sec. 11, id., p. 605).
And even if the ground and measure of the liability of a trustee of a savings bank for acts done after the act of 1875 is to be brought only in that act; then it will be found that section 33 of that act (p. 411) makes the duty of the trustees of such corporation to regulate the rate of interest, not exceeding six per cent per annum, upon the deposits therewith, in such manner that depositors shall receive, as nearly as may be, all the profits of such corporation after deducting necessary expenses.
Section 33 declares that “ no dividends or interest shall be declared, credited or paid except by authority of a vote of the board of trustees duly entered upon their minutes, wherein shall be recorded the ayes and noes upon such vote, and whenever any interest or dividends shall be declared and credited in excess of the interest or profits earned and appearing to the credit of such corporation, the trustees voting for such dividend shall be jointly and severally liable to the corporation for the amount of such excess so declared or credited.”
The words “ interest” and “ dividends ” are used in this act, as equivalent expressions. I cannot accede to the proposition-that only such trustees are liable as appear by the minutes to have voted “ aye ” in favor of making a prohibited dividend; nor that those who caused it to be declared, if paid in pursuance of such declaration are not liable, because it may have been declared at a meeting.when less than a legal quorum was present. All who voted to make the declaration, though they may have voted vwa voce, and all who subsequently at a meeting of the board approved of such act, though they approved of it by a viva voce vote, are liable; they voted for it within the meaning of the provision, imposing the liability named for the misconduct specified. I think, therefore, that the defendant is liable by the rules of the common law, and is also liable under and by force of statutory law,
[74]*74I think the right of action upon this liability of the trustee is vested in the receiver.
By the act of 1875 the liability imposed is declared to be a liability to the corporation; there can be no question- that such a right of action vested in the receivers.
The liability created by section 2 of title 4 of chapter 18 of the Revised Statutes (vol. l,p. 601), is declared to be a liability “ to the new corporation and to the creditors thereof in the event of its dissolution.”
The provision of law under, which in Osgood agt. Layton (infra) it was held that an action would be maintained by the receiver, provided that, or any dividends so made shall subject each of the stockholders receiving the same, to an individual liability to the creditors of such company, to the extent of such dividend received by him (4 Edmunds R. S., 210).
The act last cited subjects “ each of the stockholders receiving ” a dividend to “ an individual liability to the "creditors of such company; ” though the liability of the stockholders is several, it is tó the creditors generally, and not to each creditor. The liability imposed by the Revised Statutes, though several as well as joint, is “ to the creditors thereof ” generally, that is, to the creditors of the corporation, in the event of its dissolution. The reasons assigned by the court, Grover, J., in Osgood agt. Layton (3 Abb. Appeal Cases, 424, at the foot of the page) for holding that the receiver might maintain the action in that case, apply with like force to. this, and that case is an authority in point in favor of the receiver’s right to maintain this action.
Hence it follows that whether the liability of the defendant throughout, is that declared by the Revised Statutes, or whether his liability as to acts done since the passage of the act of 1875 is determined and measured by the provisions of that act, the right of the receiver to recover seems to be free from reasonable doubt. And it also follows that the defendant is liable in this action for the amount of the dividends declared by his concurrence and co-operation.
[75]*75I think there is nothing in the defense .of non-joinder of parties set up in the answer; even if it he open to the defendant to avail himself of the alleged defect by answer it appears that some of the persons alleged to be co-trustees with the defendant, were not trustees when some of the dividends were declared and credited, and are not liable therefor, and the liability of the trustees is several as well as joint.
The alleged counter-claim is unavailable. The action sounds in tort. It is brought to enforce a liability caused by the misconduct of the defendant. As to the sums assessed upon and paid by the trustees into the bank, the liability of the corporation therefor, if it be liable to pay the same, arises upon' contract; if by the terms of the resolution under which these moneys were assessed and paid, the corporation is under no liability to repay the same, unless “ the profits of the bank warrant it,” then the corporation is not hable therefor, and the profits of the bank have never warranted the payment of any part of these moneys, and as the institution is dissolved never can warrant it.